The year has started well for the protection of the consumer. The Dutch Authority for Consumers and Markets (ACM) has acted against consumer misleading almost every week so far. In this blog, we provide you with an overview of its enforcement activities until now.
It is clear that the prevention of consumer misleading, as part of the ACM’s agenda 2020-2021, is carried out strictly, just like last year. The ACM has taken action against various commercial websites which offer intermediary services to consumers in their interactions with government agencies. Another intermediary which redirected calls from consumers to the Dutch police has been forced to terminate its practices too. The ACM has ordered webshop Bicep Papa to stop using fake likes and followers for promotional purposes. It has also acted against AliExpress. Consumers were not always adequately informed about their rights. The platform has to adapt its general terms and conditions for consumers. It must also provide information about paid ranking of providers; the ACM sees risks in paid rankings. Refunds of vouchers and cancellations in the travelling industry are also monitored. Finally, the ACM warns against fraudulent locksmiths and tackles these firmly.
Mijnverklaring.nl en mijnkentekenbewijs.nl
The offering of paid intermediary services. What was it about? Empiru Investments Holding B.V. and its subsidiaries are the companies behind websites such as mijnverklaring.nl and mijnkentekenbewijs.nl (no longer active). Consumers end up on the page with the application form on the websites of intermediaries after clicking on online ads. The business model of these websites consists of forwarding consumers to the government agency’s website of the service which consumers need (such as certificates of conduct). The websites (wrongfully) claim that their application process is quicker or that their rate of success is higher. Once consumers have filled out the form and paid the fee, the intermediary forwards their application to the government agency. It should be noted that the consumers still have to pay that government agency afterwards. If consumers subsequently want to use their cooling-off period and annul their application, they are told that such withdrawals are impossible under the general terms and conditions. Moreover, the intermediaries ask consumers to leave a positive review; if they do, they are promised that half of the fee gets refunded. The reviews left online cannot be regarded as being truthful and reliable, as many consumers will (probably) have written these reviews with the sole aim to get half their money back.
The parent company Empiru has been ordered to stop misleading consumers about its identity and activities through its two subsidiaries, on pain of forfeiting a recurring penalty of 15,000 euros per week, with a maximum of 150,000 euros. It has been ordered to clearly inform consumers about the services and costs, the company’s identity (name, address, etc.) and contact details, after 21 December 2020. Furthermore, it has to comply with consumer protection rules, such as the right of withdrawal (the cooling-off period) and the company must refund payments to misinformed consumers which reach out to the company. Finally, the company must stop giving instructions about the content and tenor of the reviews it uses to promote itself. If this does not help, stricter measures follow.
This intermediary redirected calling consumers in need of police assistance to the Dutch police. The company used the police’s slogan “no emergency, yet police needed” to mislead consumers into thinking that this was an official channel. When consumers received their bills, they were confronted with high calling costs. Due to the way in which the company had designed its advertisement on Google and website, consumers were led to believe that the websites and numbers were official. This harmed consumers which had to pay more money. It also harmed the Dutch police. The provision of directory services is not illegal, but providers must clearly communicate who the provider is, what the service contains, and whatit costs. If these redirectors use ads or websites, they must clearly mention the provision of paid directory assistance services and that callers are not directly contacting the agency they need. This must be communicated at the time of calling. Once consumers call such providers, they must be informed of the providers’ identity, the fact that they are not calling an official number, and what the costs of the call are per minute. Failure to comply with these rules can lead to severe sanctions; the ACM is empowered to withdraw telephone numbers and impose recurring penalties or fines of up to 900,000 euros per infringement.
Bicep Papa – about fake followers and likes
Bicep Papa B.V. (Bicep Papa) is a nutrition webshop owned by Dutch influencer Mobicep. It sells nutritional supplements online to consumers. This company had purchased fake followers and likes to use these on Instagram to promote the products of the webshop. It is prohibited for companies to make use of such means, because the image consumers get of such companies and their products may be better than they actually are. Consumers can be misled by this, which is why this is prohibited. The ACM has therefore imposed an order subject to incremental payments against Bicep Papa with a maximum of 100,000 euros, making this webshop the first company ever to be sanctioned for this conduct.
Action has also been taken against AliExpress, a huge Chinese webshop. It has improved its presentation of the information on consumer rights following a joint action by the ACM and the European Commission. The Dutch Consumer Association had asked for enforcement. As a result, AliExpress has promised to inform consumers about their 14-day right of withdrawal without the need to provide any reasons as well as about their right to return the products within 14 days after cancellation. AliExpress must also indicate and respect EU rules regarding legal guarantees. Attention must be paid to extra costs: consumers need to be informed about additional costs or taxes, for instance customs duties. The information about the seller’s identity also needs to be communicated, and potential paid ranking; the company must indicate whether the seller has made payments to end up higher in the search results. Finally, the company’s terms and conditions have been updated and consumers can now make use of legal dispute settlement in their own countries and are no longer forced to apply to the Court of First Instance in Hong Kong. AliExpress must make its general terms and conditions for consumers easier to read and spot before 1 May 2021.
The ACM has completed a study into paid or sponsored ranking and has identified competition and consumer risks. Ranking offers providers the option to pay extra to rank higher in search results on platforms. Consumers can be misled if it is unclear that the search results have been affected. Ranking can also reduce competition between providers. Providers are willing to pay extra, because this attracts more visitors and increases sales. It has been found that they are willing to pay an additional fee of roughly 15-40%. The study also shows that paid ranking is still quite limited, with some exceptions. It is there that the ACM sees these risks. The study also contains an assessment framework that shows individual risks. Firstly, providers can pass on the extra fee in their prices. Secondly, the payments can reduce competition on price and quality.
After all, those who pay more (instead of charging better prices) can climb higher up the platform ladder. Finally, providers who pay to appear on top are sometimes not as relevant as others. The platforms usually sort providers according to relevance, for example through review scores and repeat purchases. Paid ranking also allows platforms to weigh their own financial interest in the sorting process. Paid ranking can also be positive and provide more quality, provided that the paid results are recognizable to consumers. Paid ranking can help with the introduction of new products or with more efficient capacity utilization. Transparency could help in recognising paid rankings and it could also prevent consumers from clicking on these results unknowingly. Transparency declarations have often been found difficult to find or are simply unclear. For example, a label was introduced and added to paid results on a platform, but this turned out to have little effect on purchases. Consumers may not see or understand the label or they might find the paid results as relevant as the regular results. In its guidelines on the protection of the online consumer, the ACM explains that platforms must be transparent about rankings. Consumers must see and understand the paid ranking statement. Companies can use an A / B test to see if their transparency statements are sufficiently recognizable and understandable. Paid ranking is investigated further.
Travelling vouchers and cancellations
The ACM monitors how the travel industry deals with cancellations and refunds of package tours in the corona aftermath. Vouchers were issued in 2020 and must be paid out or redeemed in the course of 2021. Consumers who have booked a package trip after 1 January 2021 must be sufficiently informed about their rights and must get their money back refunded within 14 days in case of cancellation. Since 1 January 2021, the industry no longer issues vouchers for newly booked trips. This stems from agreements between the Dutch cabinet and the travel industry. Tour operators can take out loans that allow them to repay unredeemed “corona vouchers” in a timely manner (within one year of issue).
Locksmiths are active which take advantage of consumers in need by charging excessive prices, approaching consumers aggressively, doing poor work or being unreachable in case of complaints. The ACM has requested Google to remove online advertisements from such parties and to refuse new ones. In addition, companies that refer customers via the internet or telephone (lead generators) have been instructed to stop referring to such locksmiths and a number of telephone numbers and websites have been blocked. When consumers lock themselves out and search for a locksmith on the internet, they end up at advertisements from unreliable parties that sometimes charge up to 8000 euros per job. The top search results and advertisements are often from less reliable parties. The websites at issue frequently contain misleading information or lack information about the company’s identity, leaving the consumers nowhere to complain. An additional problem is that it concerns a network of companies and persons who change name, website and telephone number regularly. Extra tips for consumers to find reliable parties can be found on consuwijzer.nl.
Consumer misleading remains an important point of attention for the ACM. Regardless of the size of an undertaking, it is important that consumers are not misled, for example through the provision of paid intermediary services or by using fake reviews, likes or followers. In addition, consumers must always receive correct and complete information about their rights, including information about potential paid ranking.